Re Morris, Theodore Constantine; Donnelly, Max Christopher as trustee of the Bankrupt Estate of T C Morris v Colonial Mutual Life Assurance Society Ltd

[1997] FCA 904

FEDERAL COURT OF AUSTRALIA

Practice and procedure - notice of motion to strike out proceedings or have part of the proceedings separately determined - dissolution and deregistration of respondent corporations - inconvenient joinder - abuse of process.

Bankruptcy Act 1966
Federal Court of Australia Act 1976 - s 22

ReAustral Family Homes Pty Ltd(in liq) (1992) 28 NSWLR 247 - applied
Saccharin Corporation Ltd v Wild [1903] 1 Ch 410 - distinguished
Williams v Spautz (1992) 174 CLR 509 - cited

RE THEODORE CONSTANTINE MORRIS;  EX PARTE:  MAX CHRISTOPHER DONNELLY AS TRUSTEE OF THE BANKRUPT ESTATE OF T C MORRIS v COLONIAL MUTUAL LIFE ASSURANCE SOCIETY LIMITED & ORS

No. NB 3283 of 1993

REASONS FOR JUDGMENT (NO. 1)

JUDGE:        Beaumont J
PLACE:        Sydney
DATE:          7 August 1997

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NB 3283  of   1993

RE:	THEODORE CONSTANTINE MORRIS
EX PARTE:	MAX CHRISTOPHER DONNELLY AS TRUSTEE OF THE BANKRUPT ESTATE OF T C MORRIS APPLICANT
AND:	COLONIAL MUTUAL LIFE ASSURANCE SOCIETY LIMITED FIRST RESPONDENT
MONARTH PTY LIMITED SECOND RESPONDENT
CEDRIM PTY LIMITED THIRD RESPONDENT
LOUIS CONSTANTINE MORRIS FOURTH RESPONDENT
ENID ROSLYN SIVELL (WHITBREAD) FIFTH RESPONDENT
HELEN ANASTOPOULOS (ELLEN MONTZOUROPOULOS) SIXTH RESPONDENT
YIANOULA (JENNIFER ) MORRIS SEVENTH RESPONDENT
THEODORE CONSTANTINE MORRIS EIGHTH RESPONDENT
JUDGE:		BEAUMONT J
DATE OF ORDER:		7 AUGUST 1997
WHERE MADE:		SYDNEY

ORDERS:

1. Strike the names of the second and third respondents from the record of the proceedings.

1. Strike out pars 45-49, inclusive, of the statement of claim.

1. Note that claims 1 to 5, inclusive, in the application are no longer pursued.

1. Order that the notice of motion otherwise stand over to a time to be fixed.  Reserve liberty, in this connection, to the first respondent to apply to restore its notice of motion on such notice, if any, as the Court should allow.

1. Costs of the notice of motion reserved.

1. Strike the names of the fourth and fifth respondents from the record of the proceedings.

Note:Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NB 3283 of 1993

RE:	THEODORE CONSTANTINE MORRIS
EX PARTE:	MAX CHRISTOPHER DONNELLY AS TRUSTEE OF THE BANKRUPT ESTATE OF T C MORRIS APPLICANT
AND:	COLONIAL MUTUAL LIFE ASSURANCE SOCIETY LIMITED FIRST RESPONDENT
MONARTH PTY LIMITED SECOND RESPONDENT
CEDRIM PTY LIMITED THIRD RESPONDENT
LOUIS CONSTANTINE MORRIS FOURTH RESPONDENT
ENID ROSLYN SIVELL (WHITBREAD) FIFTH RESPONDENT
HELEN ANASTOPOULOS (ELLEN MONTZOUROPOULOS) SIXTH RESPONDENT
YIANOULA (JENNIFER ) MORRIS SEVENTH RESPONDENT
THEODORE CONSTANTINE MORRIS EIGHTH RESPONDENT
JUDGE:	BEAUMONT J
DATE:	7 AUGUST 1997
PLACE:	SYDNEY

REASONS FOR JUDGMENT (No. 1)
(on strike out application)

There is before the Court a notice of motion, filed on behalf of the first respondent on 7 July 1997, seeking to have the whole, or part, of the proceedings struck out or, alternatively, to have part of the proceedings separately determined.

The motion is grounded on a number of considerations but the most significant, and the starting point for any analysis of this interlocutory application, is the acknowledged circumstance that two of the respondent corporations have been dissolved, upon the cancellation of their registration.  As is now explicitly stated in the statement of claim, the second respondent was deregistered on 28 August 1995; the third respondent was deregistered on 24 April 1996.

In pars 45-49, inclusive, of the statement of claim, the applicant, who is the trustee in bankruptcy of the eighth respondent, claims that the eighth respondent was, at the time of the making of the sequestration order, beneficially entitled to the shares in the capital of both the second and the third respondent.  In his application the applicant sought, in pars 1-5, declaratory and consequential relief in that connection.  The ultimate relief there sought was that any respondent, other than the first respondent, claiming any interest in the shares in the capital of either the second or the third respondent, should transfer that interest to the applicant, as such trustee in bankruptcy.

The notice of motion was made returnable at the commencement of the final hearing of the proceedings.  In the course of the hearing of the motion, I took into evidence documentary material adduced by the applicant, which will, to all intents and purposes (so I am informed by counsel for the applicant) represent the material to be relied upon by the applicant at the final hearing.

At the same time, it should be noted at this stage that, on behalf of the first respondent, objection has been foreshadowed to the tender at the final hearing of a substantial part of the documentation sought to be relied upon by the applicant.  In particular, the applicant will seek to rely upon the transcript of examinations, under the provisions of the Bankruptcy Act 1966, of some of the individual respondents. I have, at this point of the proceedings, indicated that my tentative view would be that the evidence given in such examinations would be admissible only against the party examined. However, it should further be noted that counsel for the applicant has foreshadowed that, at an appropriate stage, he proposes to tender the whole of the documentary material in evidence, including the evidence in the transcript of the examinations, against all respondents, including the first respondent. Counsel for the first respondent has indicated that this tender will be vigorously resisted, so far as his client is concerned. The ultimate admissibility of that material in any final hearing is not, of course, a matter upon which I need, or should, express any view at this point.

On behalf of the first respondent, the motion is, as I have said, sought to be grounded on a number of bases, including the inconvenience of joinder of proceedings which are embarrassing to the first respondent.  Reliance is placed in this connection upon Saccharin Corporation Ltd v Wild [1903] 1 Ch 410 (at 422). It is also submitted, on behalf of the first respondent, that the proceedings, or part of them, are, so far as concerns the first respondent, an abuse of process in the sense explained in Williams v Spautz (1992) 174 CLR 509.

In my opinion, there is considerable force in the submissions made on behalf of the first respondent, with respect to the dissolution of the second and third respondents.  As McLelland J observed in ReAustral Family Homes Pty Ltd(in liq) (1992) 28 NSWLR 247 (at 249):

“After the dissolution of a company no action can be brought to which the company would have been a necessary party... and the dissolution extinguishes all claims by or against the company.”

See also Sweeney & Vandeleur v BNY Australia Ltd (1993) 11 ACSR 356.

It is, of course, open to a person aggrieved by the cancellation of the registration of a company to apply to the court under s 574(3) of the Corporations Law to seek the reinstatement of the company.   Whether the court will, in the exercise of its discretion, exercise that power, is a matter which will be determined according to particular circumstances of the case.  Indeed, an order for reinstatement might only be made, in some situations, upon the imposition of appropriate conditions.

But need not pursue the possibility of a reinstatement application in the present case since the applicant has not sought to apply for that relief.  The acknowledged fact is that the second and third respondents have been dissolved.  It must follow from this that no claim in respect of any beneficial entitlement to the shares of either company could succeed, unless the company in question were to be reinstated.  It further follows, in my view, that pars 45-49, inclusive, of the statement of claim should be struck out.  I note in this connection that once the argument on the notice of motion had progressed some distance, counsel for the applicant indicated that he did not propose to pursue claims 1 to 5 in his application.  It will also follow that the names of the second and third respondents should be struck from the record of the present proceedings.

As I have mentioned, the first respondent seeks to go further in the present notice of motion than obtaining orders striking out the names of the second and third respondents.  The first respondent seeks, as I follow the submission by its counsel, to have the whole of the statement of claim struck out.  It is necessary to mention, in this connection, that during the course of the argument on the motion, counsel for the applicant sought and was granted, without opposition except as to costs, leave to amend his statement of claim in some respects.  However, I have come to the view, in the exercise of my discretion, that the whole of the statement of claim should not be struck out.  I reach this view in the rather special circumstances of the present litigation.  I have in mind, in particular, the circumstance that I have just embarked upon the final hearing of the matter, coupled with the fact that it now appears, clearly enough, that the parameters of the litigation at its final stage will be confined to documentary material which, apart from the transcripts previously mentioned, does not appear, at least on its face, to be contentious.

Reliance is placed, as has been noted, on behalf of the first respondent, on Saccharin Corporation Ltd v Wild, above.  In that case it was held to be oppressive to seek to combine in a suit for patent infringement, claims made on no less than twenty three patents.  It was held, in effect, that this was an oppressive use of the litigious process.  The plaintiffs were held not to be entitled to unite so many different claims in one action, but were limited to selecting a certain number of them, not exceeding three in the first instance, upon which they could then proceed with their action.  In my view, that approach is distinguishable for present purposes.  Although the present matter is complex, and notwithstanding that it is reasonable to anticipate that the parties will be sharply divided on the admissibility of the transcript evidence, and will be equally divided upon the inferences that should be drawn from that material, whatever its admissibility against particular respondents, I think that it is fair to say that the parameters of the present litigation are now reasonably well defined and reasonably capable of management from this point.

I do not, at the moment, see any sound basis for a suggestion that the first respondent has been, in effect, overwhelmed with a body of material of such complexity that it is unreasonable to expect the first respondent to deal with it. To that extent, I do not, at this stage of the litigation, see any indication of an abuse of process. I bear in mind also, in the present connection, the provisions of s 22 of the Federal Court of Australia Act 1976 which directs the Court to deal with a matter so that, as far as possible:

“[A]ll matters in controversy between the parties may be completely and finally determined and all multiplicity of proceedings concerning any of those matters avoided.”

It seems to me, in the interests of justice, that the present matter should proceed to a final hearing at this point.  Nevertheless, there should be reserved to the first respondent, liberty to contend, at a later stage, should the circumstances, as they then appear, justify it, that a particular aspect of the proceedings indicates an abuse of process.  As I have mentioned to counsel in the course of argument on the motion, this position could be achieved by my making orders, as foreshadowed, in respect of the names of the second and third respondents, and by striking out of pars 45-49, inclusive, of the statement of claim, but otherwise not dealing further with the notice of motion at this point, and instead, standing it over to a time to be fixed during the course of the final hearing, should that be necessary.  Liberty to apply to the first respondent in that connection should be reserved.

The orders, then, that I now make are as follows:

1. Strike the names of the second and third respondents from the record of the proceedings.

1. Strike out pars 45-49, inclusive, of the statement of claim.

1. Note that claims 1-5, inclusive, in the application are no longer pursued.

1. Order that the notice of motion stand otherwise over to a time to be fixed.  Reserve liberty, in this connection, to the first respondent to apply to restore its notice of motion on such notice, if any, as should be allowed.

1. The costs of this notice of motion reserved.

On behalf of the first respondent, application is further made that I also strike out the names of the fourth and fifth respondents from the record.  On behalf of the applicant, it is now conceded that the presence of these respondents as parties can only be justified by virtue of the claims made in pars 45-49, inclusive, of the statement of claim.  It must follow that the names of those respondents should also be struck from the record of the proceedings.  I note that counsel for the applicant indicated a possibility of a future amendment of the statement of claim, so as to plead a cause of action to which the fourth and fifth respondents would be necessary parties.  However, since I have now embarked upon the final hearing and anticipate that it will conclude by tomorrow, there is, in my view, no realistic prospect of such an application being made, let alone granted.  I therefore order that the names of the fourth and fifth respondents be struck from the record of the proceedings.

I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont

Associate:

Dated:            7 August 1997

Counsel for the Applicant:	F Lever with J Gooley
Solicitor for the Applicant:	Swaab & Associates
Counsel for the First Respondent:	R Weber with J Hennessy
Solicitor for the First Respondent:	Minter Ellison
Date of Hearing:	7 August 1997
Date of Judgment:	7 August 1997